Competitiveness Center loses bank backing

Attempts to refinance the debts of the New River Valley Competitiveness Center’s parent company are still in the works, but a Pulaski bank declined to fund the effort, Pulaski Town Council was told Tuesday night.
A while back, the Town of Pulaski, Pulaski County and the Town of Christiansburg agreed to back the $2.6 million refinancing effort of New River Valley Development Corporation with moral obligations totaling just over $1.8 million. However, those moral obligations were issued in favor of Carter Bank & Trust, which declined the funding “due to two shared First Deeds of Trust on the properties by the (Economic Development Authority).”
Tuesday night, Mayor Jeff Worrell said the town is now being asked to transfer its $184,450 moral obligation to National Bank of Blacksburg, which holds the Corporation’s initial loan.
According to a letter to the town from D. Michael Barber, president of New River Development Corporation, negotiations are in progress with the Blacksburg bank for a $600,000 loan and a reduction of the interest rate on its existing $1.2 million existing mortgage.
“In order to reduce the rate and secure the second loan which is critical to the Corporation’s survival, (the bank has) asked if the moral obligations could be issued to them,” Barber states in the letter. The rate reduction and “more favorable rate” on the new loan “would save the corporation approximately $12,000 per year,” he added.
Despite the request, town council took no action Tuesday night.
Worrell said the situation is “very fluid” and “changing every day.
“I don’t think we have enough information to make an informed decision,” the mayor told council members.
Pulaski Economic Development Director John White, who supported the moral obligation, agreed with Worrell. He said he hopes to have more information for town council by the Nov. 17 work session.
If the Development Corporation becomes insolvent, it would threaten survival of the Competitiveness Center business incubator off Viscoe Road at Fairlawn. The Center, which is operated by the Development Corporation, had 19 tenants (including several regency agencies) and 65 employees as of this past June. However, its occupancy rate is only 57 percent due to economic conditions and businesses having graduated from the center, according to Pulaski County Administrator Peter Huber.
Pulaski County agreed during the summer to enter into a moral obligation to support half ($1,317,500) of the refinancing loan under the condition at least one other jurisdiction partner share in the obligation.
In addition to Pulaski’s obligation, Christiansburg agreed to back up to $350,000.
Besides operating the Competitiveness Center, officials say the Development Corporation also provides other benefits to the eight founding jurisdictions.
Refinancing the original loan would have allowed the Corporation to save about $35,000 per year.
Member jurisdictions that declined obligations or never took action on their requests for backing include Blacksburg, Radford and Floyd, Montgomery and Giles counties.
Worrell pointed out at an earlier council meeting that the success rate of businesses coming out of the incubator is 80 percent, compared to an 80 percent failure rate for small businesses that start without the benefit of an incubator.
He contends each of the eight jurisdictions is partly to blame for the Center’s financial situation in that when a new business is opening “we all want it on our Main Street when it probably needs to be there to start with.”
In addition to the moral obligation, the Development Corporation has asked the localities to provide “in-kind operational support” such as mowing, accounting, management services and light maintenance for the incubator.

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Competitiveness Center loses bank backing

Attempts to refinance the debts of the New River Valley Competitiveness Center’s parent company are still in the works, but a Pulaski bank declined to fund the effort, Pulaski Town Council was told Tuesday night.
A while back, the Town of Pulaski, Pulaski County and the Town of Christiansburg agreed to back the $2.6 million refinancing effort of New River Valley Development Corporation with moral obligations totaling just over $1.8 million. However, those moral obligations were issued in favor of Carter Bank & Trust, which declined the funding “due to two shared First Deeds of Trust on the properties by the (Economic Development Authority).”
Tuesday night, Mayor Jeff Worrell said the town is now being asked to transfer its $184,450 moral obligation to National Bank of Blacksburg, which holds the Corporation’s initial loan.
According to a letter to the town from D. Michael Barber, president of New River Development Corporation, negotiations are in progress with the Blacksburg bank for a $600,000 loan and a reduction of the interest rate on its existing $1.2 million existing mortgage.
“In order to reduce the rate and secure the second loan which is critical to the Corporation’s survival, (the bank has) asked if the moral obligations could be issued to them,” Barber states in the letter. The rate reduction and “more favorable rate” on the new loan “would save the corporation approximately $12,000 per year,” he added.
Despite the request, town council took no action Tuesday night.
Worrell said the situation is “very fluid” and “changing every day.
“I don’t think we have enough information to make an informed decision,” the mayor told council members.
Pulaski Economic Development Director John White, who supported the moral obligation, agreed with Worrell. He said he hopes to have more information for town council by the Nov. 17 work session.
If the Development Corporation becomes insolvent, it would threaten survival of the Competitiveness Center business incubator off Viscoe Road at Fairlawn. The Center, which is operated by the Development Corporation, had 19 tenants (including several regency agencies) and 65 employees as of this past June. However, its occupancy rate is only 57 percent due to economic conditions and businesses having graduated from the center, according to Pulaski County Administrator Peter Huber.
Pulaski County agreed during the summer to enter into a moral obligation to support half ($1,317,500) of the refinancing loan under the condition at least one other jurisdiction partner share in the obligation.
In addition to Pulaski’s obligation, Christiansburg agreed to back up to $350,000.
Besides operating the Competitiveness Center, officials say the Development Corporation also provides other benefits to the eight founding jurisdictions.
Refinancing the original loan would have allowed the Corporation to save about $35,000 per year.
Member jurisdictions that declined obligations or never took action on their requests for backing include Blacksburg, Radford and Floyd, Montgomery and Giles counties.
Worrell pointed out at an earlier council meeting that the success rate of businesses coming out of the incubator is 80 percent, compared to an 80 percent failure rate for small businesses that start without the benefit of an incubator.
He contends each of the eight jurisdictions is partly to blame for the Center’s financial situation in that when a new business is opening “we all want it on our Main Street when it probably needs to be there to start with.”
In addition to the moral obligation, the Development Corporation has asked the localities to provide “in-kind operational support” such as mowing, accounting, management services and light maintenance for the incubator.